Tuesday Topic: Deposit Market Takes a U-Turn

I noticed the Ally rate cut.  We have been closely watching FHLB rates and narrowing the gap between our rate offerings and what we can get at the FHLB.  We have been very cautious about loan growth and investments in this rate environment and since we have quite a bit of wholesale funding, we are aggressively paying those off and not reinvesting excess cash due to the limited spread we see for the lack of credit/interest rate risk spread.

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Glen Stiteley
CFO
Investors Community Bank
Manitowoc WI
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Original Message:
Sent: 07-02-2019 08:46
From: Barb Rehm
Subject: Tuesday Topic: Deposit Market Takes a U-Turn

Goldman Sachs' Marcus and Ally Financial beat the Federal Reserve to the punch and lowered the rates they pay on savings accounts. "Interest rates are on the downswing and projected to fall further," Ally said in a note to customers explaining the move. Goldman didn't offer customers an explanation but suggested they explore its high-yield certificates of deposits, according to The Wall Street Journal. See attachment for one of the recent Marcus communications. The Fed started raising rates in 2015 and it was widely expected those hikes would continue this year, but then President Trump began leaning on the Fed and the Fed began finding new ways to say it wasn't committed to further tightening, which led lots of people to conclude the Fed's next move on rates will be down. How trade policy shakes out is likely to have a big impact on which way the Fed goes. Is your bank preparing for higher or lower rates? I'd really love to hear from you on this question. 

P.S. Considering how many people will be away from work on Friday, the Weekly News Roundup is taking this week off. I hope everyone has a fantastic Fourth of July!

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Barb Rehm
Senior Managing Director
Promontory Interfinancial Network, LLC
Arlington VA
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